The Corporate Sustainability Reporting Coalition (CSRC) represents financial institutions, professional bodies, NGOs and investors with assets under management amounting to a Global AUM of US$2 trillion.

 We believe progressive companies understand that long-term value is enhanced by embedding long-term sustainability considerations into their business strategy and by fully disclosing their progress to investors. This is why the Corporate Sustainability Reporting Coalition was founded.

 The Coalition is collectively calling on all United Nations member states to commit to develop a Convention that mandates company boards to consider sustainability issues, and to integrate those issues that they consider to be material within the reporting cycle, in their Annual Report and Accounts ? or explain why if they do not. We are also looking for effective mechanisms for investors to hold companies to account on the quality of their disclosures, including for instance, an advisory vote at the Annual General Meeting.

EXECUTIVE SUMMARY

 Governments first referred to environmental reporting at the United Nations Conference on Environment and Development in 1992.

 A large number of companies now report on their environmental, social and governance (ESG) performance and it has been demonstrated that there is a direct correlation between sustainable business practices and the longer-term financial success of that company.

 At present however, there is no globally accepted rule requiring reporting on ESG performance. Despite the large number of companies publishing such reports, the vast majority of companies fail to do so.

 We proffer that a requirement for a company to consider and report on a sustainability issues will create the right kind of discussions within boardrooms, throughout firms and encourage investors to think about the sustainability of the firm. This will help capital to be allocated to more sustainable, responsible companies and strengthen the long term sustainability of the financial system.

 If a Sustainable Green Economy is to be reached, the time has now come for sustainability reporting to become standard practice. This can be achieved by the UN Conference on Sustainable Development (Rio+20) conference committing to develop a Convention on Corporate Sustainability reporting.

 It is now almost twenty years since the first Earth Summit, as such we believe next year offers a momentous opportunity to move this agenda forward at a global level.

Progress Governments first referred to environmental reporting at the United Nations Conference on Environment and Development in 1992. In Agenda 21 of the Conference, governments agreed that business and industry should be ?encouraged to adopt and report on their environmental records, as well as on the use of energy and natural resources?.

We recognise and support the considerable progress that has been made since then.

There have been a number of initiatives under the UN umbrella promoting sustainability reporting. Such initiatives include UN Global Compact, United Nations Environment Programme Finance Initiative (UNEP FI) and the United Nation Principles for Responsible Investment (UN PRI).

There has been progress in company policy, for example, since its launch in 2000, over 8,700 companies have signed up to The United Nations Global Compact, which covers the areas of human rights, labour, environment, and anti-corruption.

There has also been progress in guidance for companies from Governments ? such as through the recent further strengthening of the OECD guidelines for multinational enterprises.

And progress by investors ? more than 900 institutional investors from 48 countries with over $30 trillion in assets signed up to the United Nations-backed Principles for Responsible Investment. They were launched just five years ago. All of these investors recognise that that environmental, social, and corporate governance (ESG) issues can affect the performance of investment portfolios.

However, despite this progress, we are still a very long way indeed from the ultimate aim of transparency, comparability and relevance of corporate sustainability reporting.

In other words, these progressive voluntary initiatives have not been enough - for example so far less than two per cent of listed companies have opted into the Global Compact.

The Transparency and Accountability Gap

Sustainable Stock Exchanges, an initiative by UNPRI, UNCTAD and Global Compact has been urging all stock market listing authorities to make it a listing requirement that companies consider how responsible and sustainable their business model is and put a forward-looking sustainability strategy to the vote at their AGM.

Aside from a few notable examples such as the Singapore, Johannesburg and Istanbul Exchanges, there has yet to see a serious commitment from stock exchanges to make changes to their listing rules. This is reflected by analysis which indicates that at present more than 75% of the companies covered by Bloomberg do not currently disclose their sustainability performance.

It is our belief that stock markets require the support from governments and regulators. This is why we believe this is a relevant issue for the global forum of the Earth Summit.

The business case for sustainability reporting

According to a recent McKinsey survey, more than 50 percent of executives consider sustainability ?very? or ?extremely? important in a wide range of areas, including overall corporate strategy.

The internal and external value that companies have found in sustainability management and reporting is widely documented. Sustainability reporting increases innovation and competition and at the same time makes organisations more accountable for their impacts. The evidence for the business case is building as uptake of reporting increases. To cite two examples:

Goldman Sachs is one of the firms to have carried out analysis of the relationship between how companies address ESG issues and the returns they generate. It contends that in a number of sectors there is a direct correlation between sustainable business practices and the longer-term financial success of that company.4

WestLB also published a study of the materiality of extra-financial factors based on a sample of 540 European firms. It found evidence of a link between extra-financial risk, cost of capital to a firm and shareholder value. The report suggested that compiling a sustainability report was among the most important catalysts for change ? contributing to accumulation of knowledge, questioning of processes and the establishment of suitable structures and practices.5

Some organizations are now producing integrated reports, a form of corporate report that brings together financial performance data with material information about an organization?s strategy, governance, performance and prospects in a way that reflects the economic, political, social and environmental context within which it operates. An integrated report provides a clear and concise representation of how an organization creates value, now and in the future. In August 2010, the International Integrated Reporting Committee (IIRC) was established to create a globally accepted framework for integrated reporting. The objective is that through integrated reporting many more companies and their stakeholders will become aware of sustainability performance measurement and disclosure and start acting on this information.6

The market case for sustainability reporting

Markets are driven by information. If the information they receive is short term and thin then these characteristics will define our markets. If companies do not provide an assessment of the broader Environmental, Social and Governance risks and opportunities to which their business model is exposed, then how can the market assess the sustainability of that company's growth?

Recent years have seen an increasing interest from markets in sustainability performance data disclosed in reports. There is considerable evidence that investors require this information and there has also been seen some major investment such as Thompson Reuters and Bloomberg adding to the data set that they provide investors, while rating agencies such as Standard & Poors have created ESG indices for India, Egypt and the MENA region.

Within 60 days after the launch of the product on Bloomberg terminals 11.5m hits on the ESG data points were recorded. At the time of writing, Bloomberg estimates that about one thousand users now use Bloomberg just for ESG analysis. They also report that the number of users is increasing with more conventional asset managers approaching Bloomberg regarding the product.

While the number of reporters is growing, including in emerging economies such as Brazil, China and India, and the quality of reporting improves, sustainability reporting far from achieving its full potential.

At the current rate it would take decades before sustainability reporting is common practice across global markets. This means that regulators, investors and stakeholders know little or nothing of the sustainability practices and impacts of the vast majority of the world?s large companies.

Markets will not routinely use sustainability information as long as only a minority of companies report. A critical mass of sustainability information is needed to inform markets and enable performance benchmarking and analysis. Companies that do not report withhold from the markets information that is important for the assessment of medium to long term risk and value. By leaving information gaps and creating asymmetries of information, non-reporting companies impose a cost on the markets and undermine its effective functioning.

The world needs to move from the innovative and pioneering approach of a minority of companies to a true global mainstream practice for all companies.

A CONVENTION ON CORPORATE SUSTAINABILITY REPORTING

The Corporate Sustainability Reporting Coalition (CSRC) calls for the member states at the United Nations 2012 Earth Summit to:

 Note that the increased quantity and quality of data available through sustainability reporting can be a powerful tool to help markets work more efficiently.

 Commit to develop a global policy framework requiring boards of all listed and large private companies to consider sustainability issues and to integrate material sustainability information within the reporting cycle, in their Annual Report and Accounts ? or explain why if they do not.

The global policy framework (which can take the form of a Convention) should adhere to three key principles:

? Transparency ? enhance transparency by requiring national measures which would mandate the integration of material sustainability issues within the company reporting cycle, in their Annual Report and Accounts;

? Accountability ? provide effective mechanisms for investors and all stakeholders to hold companies to account on the quality of their disclosures, including for instance an advisory vote at the Annual General Meeting (AGM).

This is a modest, market-based proposal that we believe represents the next step towards sustainable capital markets.

APPENDIX A - POLICY FREQUENTLY ASKED QUESTIONS

1. Are you setting out a standard that all companies must adopt?
No. We merely ask for the support of governments to make corporate sustainability reporting a ?report or explain? requirement and for this report or explanation, in whatever form it takes, to be put to shareholder approval at the AGM. However, we are not dictating the form it should take.

This will provide corporations with the freedom to define their own reporting and where they determine that it is not necessary, outline why. This will also ensure that the report is based on the board?s best thinking.

Those companies yet to explore reporting in this area may review the excellent work already done in this area by the Global Reporting Initiative (GRI) that produces a comprehensive Sustainability Reporting Framework that is widely used around the world, to enable greater organisational transparency and the current discussions in the International Integrated Reporting Committee. It is important to reference the normative frameworks for sustainability offered by UN Global Compact and OECD Guidelines for Multinational Enterprises, as well as the contribution of ISO, PRI, UNCTAD and UNEP. .

2. Why have you focused on asking boards to publish their thinking rather than for example proposing a sustainability reporting regulation?

We do not think it possible to craft a regulation that specifies a sufficiently detailed reporting template on the rich diversity of corporations around the world. Consequently, we have decided against proposing heavy handed regulation that tries to enforce one reporting template. This is also because regulation is often slow moving, lags the market, and encourages a minimum compliance mentality within the company. We are seeking to stimulate a substantive board discussion on the risks and opportunities to a company arising from sustainable development, as well as the creation of their strategic response. We are also anticipating that some companies will seek to compete on the quality of their disclosure in this area (as, indeed, is already the case).

Equally, however, we do not have blind faith that markets will self regulate toward sustainability. The evidence for spontaneous progress on a purely voluntary basis is that it will be slow.

3. What needs to change within the system if it were to adopt your recommendation?

This will vary for different jurisdictions. For example, where the regional code of Corporate Governance is embedded within the listing rules then this document could be updated, requiring the support of all the bodies that govern this code. Where it is guided by the exchange itself, then the exchange can update the code itself. Where guided by primary legislation, then this will need to be changed. For this reason we adopted a report or explain approach that would set the principle and leave flexibility to national regulators.